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Cleaning Up The Clutter

Most television and radio stations in Puerto Rico are airing more commercial minutes per hour than ever before. Advertisers and ad agencies say more commercials mean less message retention. What can the industry do?


October 10, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Information overload: With one minute of advertising for every three minutes of programming during prime time, how can anyone remember what to buy?

Commercial clutter in many of Puerto Rico’s major media outlets has increased since last year, despite pressure from ad agencies and advertisers to cut back on commercial minutes and the media’s declared commitment to comply. Excessive clutter—advertising and other nonprogram elements during a broadcast—undermines the value of advertisements and fosters confusion and annoyance among consumers.

According to Mediafax’s TV clutter report, Televicentro’s (Channel 4) average of nonprogramming minutes per hour rose from 16.35 in 2001 to 17.76 in the first half of 2002. Telemundo’s (Channel 2) average during prime time (6 p.m. to 10 p.m.) went from 18.81 in 2001 to 19.03 during the first six months of 2002. Only Univision (Channel 11) has reduced its average of nonprogramming minutes per hour, from 17.39 in 2001 to 13.54 in the first six months of the year. Nonprogramming elements include commercials, station promotions, and public service announcements.

In 19 minutes audiences can be exposed to more than 30 commercials, thus rendering advertising efforts ineffective. Debbie Solomon, senior partner & group research director at media agency MindShare in Chicago, said excessive advertising overloads consumers with information which their minds might not be able to process. Further, advertising for similar products may confuse consumers and inhibit brand awareness, she said.

Radio listeners too are being bombarded with advertising, not only during commercial breaks but also during talk shows, when DJs mention products or services. According to an industry source, local radio stations average 16 to 18 nonprogramming minutes per peak hour (7 a.m. to 10 a.m. and 5 p.m. to 7 p.m.).

For most listeners, the whole point of turning on the radio is to listen to music or to a show. If the programming is interrupted by too many, long commercial breaks, listeners will simply surf the dial, bypassing advertising altogether, said Maria Elena Martinez, sales manager at Spanish Broadcasting System (SBS), parent company of such local radio stations as Zeta, Cosmos, and La Mega.

Research on radio clutter is limited, but seems to indicate that its impact is similar to TV clutter, said Solomon.

If clutter is such as drag, why does it exist?

First and foremost, clutter is an issue of profit. Media companies rely on advertising dollars as their primary source of revenue. During a slow economy, when advertising budgets typically shrink, stations are forced to negotiate lower rates with clients, allowing more advertising to come in for less money.

"Last year we had to offer lower rates to sell our ad space, which left us with many more advertising units to accommodate in our programming," said Martinez. "But we have started cleaning up our programming, because clutter really hurts us."

The basic economic principle of supply & demand also contributes to clutter. In an oversaturated advertising market, there is excessive demand and limited supply for commercial airtime, to which media outlets respond by increasing their advertising time slots. "Advertising agencies and clients demand air time, and we have to provide it," said Luis Roldan, president & general manager of Telemundo in Puerto Rico. "Clutter becomes a bigger problem during peak seasons, such as Christmas, when clients put a lot of pressure on stations."

The limited demand, however, hasn’t driven up prices. Ironically, rates for TV and radio advertising space in Puerto Rico are well below rates in similarly populated mainland U.S. and Latin American markets. The average cost per thousand viewers (CPM) in a comparable TV market on the U.S. mainland is $25, whereas in Puerto Rico it is $9, said Jonathan Garcia, vice president of sales & marketing for Televicentro. "The attention of Puerto Rico consumers is no less valuable than that of consumers in other markets," said Larry Sands, vice president & general manager of Univision.

"The television industry has been the victim of short-term players," said Roldan. "In the past, stations seeking to capture a larger market share turned to lowering rates dramatically." The unfortunate consequence of such moves has been an underdeveloped industry, according to Roldan.

Radio rates in Puerto Rico are also lower than those in comparably sized stateside markets. The cost per rating point in Miami and Seattle, for example, averages $150. The average cost per rating point in Puerto Rico fluctuates between $50 and $75, said Ismael Nieves, general manager of SBS.

There is a widely held belief among media buyers that radio should be the cheapest alternative, when in fact no other media offers advertisers the frequency of radio, said Martinez. "Radio is seen as a second-class medium; its value is underestimated. That is why few advertisers are willing to pay a premium to distinguish their ads," she said.

Turning tides

The tides are turning for both media companies and advertisers, which have made addressing the issue of clutter a top priority. The Association of Advertising Agencies of Puerto Rico (AAPPR by its Spanish acronym) made it a major objective last year and continues to tackle it under the incumbency of a new board. "TV is the most effective medium when it comes to generating sales through advertising, so deciding not to advertise on TV may be very detrimental to our clients," said Jose Lopez, general manager of EJE Sociedad Publicitaria & former president of the AAPPR. "That is why the AAPPR recommended that TV stations control clutter progressively. We proposed they reduce commercial minutes across the board and allow up to 16 commercial minutes per hour during the peak fourth quarter. It’s not ideal, but the change has to be gradual."

To be fair, media companies are heeding the call and slowly but surely are moving toward a less cluttered advertising environment. "I think there is a genuine interest from all parties to reach a favorable balance," said Juan Arteaga, president of Arteaga & Arteaga & current president of the AAPPR. "A phenomenon like the one that occurred a couple of years ago, when stations were airing more that 20 commercial minutes per hour, shouldn’t happen again."

Univision’s recent entry into the local market has reinforced the pressure to cut commercial minutes. Sands said he is committed to scaling back advertising to 10 minutes per hour and to airing ads during a show, when they can be seen by consumers, not between shows, when viewers get up to do other things. Televicentro began pushing to reduce clutter some three years ago, without much success, but Univision’s strict adherence to shorter commercial breaks is sending shockwaves through the local industry. "If Univision continues to grow and to keep commercial minutes low, it may force other stations to follow suit," said Lopez.

Paying the price for less clutter

Networks are hesitant to reduce commercial minutes because it would cut their revenue streams, said Solomon. Advertisers, meanwhile, are wary of a sudden, dramatic spike in ad rates. Both sides, however, seem to be warming up to the idea that less clutter will inevitably lead to higher rates but also to more effective advertising.

Cutting back on commercial minutes will push advertising rates up, so dictates the law of the invisible hand. "You wouldn’t pay the same price for a store-bought, mass-produced dress that you would for a designer dress, would you? Thus advertising in a less cluttered environment will be more expensive," said Roldan.

"It would be worth it, though, if the result is greater effectiveness," said Lopez. "But whether the market is ready for a rate increase is a whole other story."

"Ideally, rate increases would be proportional to their increased impact," said Arteaga. "The only reason clients buy commercial space is to see results. I don’t think they would buy more or less space based on price, so long as they’re getting the results they’re after."

Most agree that the road to higher rates and lower clutter will be long. Initiatives must be taken slowly to avoid sending the industry into a tailspin. "It’s a double-edged sword, because clients don’t usually react well to rate hikes," said Roldan. "We are disposed to cut back on commercial time, but our clients have to know it will mean paying more."

Arteaga said that advertising agencies must also step up their efforts to produce better, more memorable ads. "I think clutter has become a big issue because the way people consume media has changed. Consumers are exposed to more media than they were five years ago, so we have to find ways to make them recall our messages better," he said. "We need to put pressure on our creative products; they have to communicate with consumers better, because consumers will be exposed to advertisements less often."

In the end, it’s all about striking that delicate balance between clutter and revenue, without affecting ratings. Solomon cited a few examples of the benefits of reducing clutter. Meredith Broadcasting Group, she said, cut commercials during news shows and increased ratings. Similarly, Univision refuses to accept advertiser sponsorships of sections within local news shows, said Sands. "I believe our ratings have gone up because we are airing more program content and fewer ads," he said.

This Caribbean Business article appears courtesy of Casiano Communications.
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